E*TRADE Vs. Robinhood (2024)

In the world of investing, E*TRADE and Robinhood are relative newcomers: E*TRADE was born in 1982, and Robinhood showed up more than 30 years later. But even though they’re fairly young companies, each now boasts billions of dollars in assets. And both companies provide a variety of investment products and services, although E*TRADE’s offerings are more extensive.

But E*TRADE—owned by Morgan Stanley since 2020—and Robinhood also differ in a number of ways.

E*TRADE vs. Robinhood: Similarities

Here are some of the similarities between E*TRADE and Robinhood.

Investment Offerings

Not surprisingly, E*TRADE and Robinhood provide some of the same basic investment products and services. These include:

• Stocks
• Options
• Exchange-traded funds (ETFs)
• Traditional IRAs
• Roth IRAs
• Rollover IRAs
• Limited 24-hour-a-day trading

Commissions

E*TRADE charges no commission for online trades of U.S.-listed stocks, options, ETFs and mutual funds. Similarly, Robinhood charges no commission on trades of U.S.-listed stocks, options and ETFs.

Insurance

E*TRADE and Robinhood are members of the Securities Investor Protection Corp. (SIPC), a nonprofit that insures each customer up to $500,000 for securities and cash—including a $250,000 limit for cash only—in the event that a brokerage fails.

However, E*TRADE’s parent company, Morgan Stanley, goes beyond the basic SIPC coverage to insure uninvested cash up to $1.9 million per client.

Also, cash swept into bank accounts at E*TRADE’s parent company and by Robinhood is insured by the Federal Deposit Insurance Corp. (FDIC) within certain limits.

Accolades

While neither E*TRADE nor Robinhood currently makes Forbes Advisor’s overall list of the best online brokers, each appears on our list of the best online brokers for beginners. E*TRADE earns the title of “Best Online Broker for Ease of Use,” and Robinhood is the runner-up in that category.

But neither brokerage fares well in the DIY category of the J.D. Power 2023 U.S. Self-Directed Investor Satisfaction Study. Each gets a below-average score: 706 out of 1,000 for Robinhood and 691 out of 1,000 for E*TRADE.

E*TRADE vs. Robinhood: Differences

Investment Offerings

Robinhood falls short of E*TRADE when it comes to its array of investment products. Among those that are available at E*TRADE but not at Robinhood are:

• Mutual funds
• Bonds
• Brokerage account for minors
• SIMPLE IRAs
• SEP IRAs
• Inherited (beneficiary) IRAs
• IRAs for investors over age 59½
• IRAs for minors

Robinhood does stand out in a few ways, though. For instance, it offers a match of contributions to your IRA. The match is 3% for annual contributions if you’re a member of the Robinhood Gold program and 1% if you’re not. All IRA transfers and 401(k) rollovers earn 1% matches.

So, if you’re interested in access to more investment options, E*TRADE is your go-to. But if you don’t mind a leaner selection of investment products, Robinhood might satisfy your needs.

Robo-Advisors

E*TRADE provides access to a robo-advisor called Core Portfolios, which automates investment decisions. Robinhood does not offer a robo-advisor. For some, the availability or lack of automated investing could be a dealbreaker.

Investment Advice

E*TRADE provides access to investment advisors, but Robinhood does not. If you’d like to lean on some professional guidance occasionally or frequently, E*TRADE is your only option here.

Cryptocurrency Trading

E*TRADE does not allow direct trading of cryptocurrency, but Robinhood does. If you’re an avid crypto investor, Robinhood would be the better bet.

Fractional Shares

Both E*TRADE and Robinhood offer the ability to buy fractional shares. However, E*TRADE limits these purchases to its dividend reinvestment program. In this category, the broader availability of fractional shares tips the balance toward Robinhood.

Fractional shares give investors the ability to buy portions of a single share from a given company or ETF by dollar value rather than a single share at full price. For example, if company XYZ is trading at $100 per share, you might be able to buy a fractional share for $20 and own 20% of a single share in XYZ.

Education and Research

E*TRADE earns a place among Forbes Advisor’s best brokers for research and education. The brokerage gets a pat on the back for videos, articles, online courses and tools catering to a variety of investors. In addition, E*TRADE earns a nod for the organization of its research.

At Robinhood, only Robinhood Gold customers get access to specific investment research—supplied by Morningstar. This access costs $5 a month.

Robinhood does provide free access to its Snacks newsletter, Robinhood Learn and the Investor’s Guild, though. These programs offer a relatively small amount of education or research to all Robinhood customers.

For investors wanting to beef up their investing knowledge, E*TRADE is the clear winner here. But if you’re a savvy investor, you might not mind the more limited education and research options from Robinhood.

Margin Rates

Robinhood’s standard margin rate is 12%, while E*TRADE’s margin rates range from 12.20% to 14.20%. If you are a frequent margin trader, Robinhood might be your pick based on the lower margin rate.

Margin trading allows investors to purchase options or shares of a company with borrowed money. It is a complex, risky strategy best left to experienced traders.

Proprietary Funds

Morgan Stanley, E*TRADE’s parent company, offers its own mutual funds and ETFs. Robinhood has none of its own funds.

Client Assets

E*TRADE dwarfs Robinhood when it comes to assets.

Morgan Stanley tallied nearly $4.9 trillion in total client assets as of the second quarter of 2023, including nearly $1 trillion from self-directed investors—including those served by E*TRADE.

By comparison, Robinhood counted $94.5 billion in assets under custody in July 2023.

Branches

Customers of E*TRADE can use any of Morgan Stanley’s 65 branches, while Robinhood operates no brick-and-mortar locations. For anyone who wants the ability to visit a branch office, E*TRADE is the clear victor.

Who Should Choose E*TRADE?

For an investor who likes the ability to choose from a broad array of investments and wants access to investment advisors, E*TRADE may be the way to go.

E*TRADE’s investment offerings tower over Robinhood’s lineup. And unlike Robinhood, E*TRADE enables customers to obtain advice from investment professionals. In fact, E*TRADE received the second-highest score in the J.D. Power 2023 U.S. Self-Directed Investor Satisfaction Study among those seeking investment guidance.

Furthermore, E*TRADE provides a robo-advisor platform, while Robinhood does not, and E*TRADE supplies a more robust selection of education and research materials.

However, E*TRADE would disappoint cryptocurrency investors. It does not permit direct trading of crypto, while Robinhood does. And, E*TRADE is controlled by Morgan Stanley; some investors may prefer to do business with a company like Robinhood that’s not part of a massive corporation.

Pros:

• Wide range of investment products
• Availability of robo-advisor
• Access to investment advisors

Cons:

• No direct trading of cryptocurrency
• Part of huge corporation
• Low J.D. Power score for satisfaction among DIY investors

Who Should Choose Robinhood?

Although Robinhood trails E*TRADE in a number of areas, it may appeal to some investors.

For example, Robinhood enables direct trading in cryptocurrency, unlike E*TRADE. Plus, Robinhood sweetens its IRAs with 1% or 3% contribution matches, depending on your status with the company.

On top of that, Robinhood shows up on Forbes Advisor’s list of the best online brokers for beginners, alongside E*TRADE. If you’re an investing newbie, you might be attracted to Robinhood’s no-frills, easy-to-navigate platform.

However, Robinhood comes with a handful of negatives, such as a barebones selection of investment products, lack of access to investment professionals and absence of a robo-advisor.

Pros:

• No-frills investment platform
• Availability of cryptocurrency trading
• IRA contribution matches

Cons:

• Slim selection of investment products
• No access to investment advisors
• No robo-advisor